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1. Brief Introduction
The two companies D/S Svendborg and D/S 1912 have for almost a century been the parent companies
of the A.P. Møller Group. These companies were founded by Mr. Arnold Peter Møller and his father
Captain Peter Mærsk Møller. They were in the beginning entirely into shipping. In 1912, the fleet
consisted of 6 vessels.
Much has happened since the company was founded: The A.P. Møller Group has by any standards
become the biggest company in Denmark. Moreover, "Svendborg" and "1912" have recently been
merged into one company "A.P. Møller – Mærsk A/S". However, as we shall be concerned with the
performance of the company also in the past we will repeatedly make reference to the historic parent
companies.
As "Svendborg" and "1912" grew bigger they expanded into a number of other businesses. It is
common to split the main businesses of the APM Group into three broad categories:

Abstract
It is often asserted that stock splits and stock dividends are purely cosmetic events.
However, many studies have documented several stock market effects associated with
stock splits and stock dividends. This paper examines the effects of these two types
of events for the Danish stock market. Consistent with the existing literature, the
two events are associated with a significantly positive announcement effect of ap-
proximately 2.5%. However, when examining the two events more carefully, several
important results are obtained. First, a firm's motivation for announcing the two
events is completely different. Second, the positive stock market reaction is closely
related to associated changes in a firm's payout policy, but the relationship varies for
the two types of events. Finally, there is only very weak evidence for a change in the
liquidity of the stock. On the whole, after controlling for the firm's payout policy,
the results suggest that a stock split is a cosmetic event and that a stock dividend
on its own is considered negative news.
Key words: Stock splits; Stock dividends; Cash dividends; Signaling; Liquidity

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The announcement of a convertible bond call is associated with an average con-
temporaneous abnormal stock price decline of 1.75% and an ensuing price recovery in
the conversion period. A price fall and the subsequent recovery suggest price pressure
as the explanation for the announcement eect. However, in a perfect capital market
the option to convert is not exercised early and hence, the increase in the number of
shares outstanding does not occur at the announcement date. Instead, this paper ar-
gues and provides evidence that hedging-induced short selling is causing at least part
of the short-run price pressure.
Key words: Convertible bond calls; Hedging; Short selling; Price pressure; Underwriting
JEL Classication: G14; G24; G32